I agree, I must be missing something. Are there rules for allocating sales. I'm just saying I need to allocate an equal amount of the sale to force a zero gain/loss in the under one year section of the 4797. However, if I allocate a sale amount less than cost, I generate a loss against ordinary income. Shouldn't the program tell me this is wrong, given the commonsense issue that the addition was part of the whole sale?